A federal judge has ordered a hearing to consider sanctions against the lawyers who represented a pair of plaintiffs in their suit against Citibank after they lost several thousand dollars by agreeing to a loan that was backed by counterfeit Citibank documents.
U.S. District Judge Gene E. K. Pratter of the Eastern District of Pennsylvania dismissed the negligence claim against the bank and granted its motion for a sanctions hearing.
“While it is true that the court must draw all reasonable inferences in favor of plaintiffs at this stage of the case, none of the facts alleged allow the court to infer that Citibank had the sort of relationship with the plaintiffs from which any such recognized duty would arise,” Pratter said in Fink v. Corporate Liaison. “Without a duty of care to plaintiffs, Citibank cannot be held liable under a negligence theory.”
The plaintiffs, David Fink and Jerome Keough, had allegedly loaned $300,000 to Susan Werth and her company, Corporate Liaison, with the understanding that the loan was secured by a $390,000 Citibank letter of credit backed by a $1 million Citibank certificate of deposit. Neither was a valid document from the bank, according to the opinion.
The lawyers for the plaintiffs, from the firm of Silverang & Donohoe, didn’t verify the authenticity of either the letter of credit or the certificate of deposit before wiring their clients’ money, according to Citibank’s motion for sanctions against the lawyers.
The plaintiffs filed a motion opposed to sanctions, but didn’t directly address that allegation.
Read more about it in Thursday’s Legal.